What the hell is a "patent troll" anyway?

What the hell is a patent troll anyways? And how'd they get stuck with a nickname that connotes dumb, ugly, evil monsters (or weird neon-haired creatures with rhinestones for belly buttons, depending on whom you ask)?

Gary Shapiro, president of the Consumer Electronics Association, put it best, "Patent trolls [are] companies that do not produce products or services but sue those who do." Basically, they're organizations that buy up ambiguously worded patents and then use said patents to extort money (by suing or demanding licensing fees) from developers whose product infringes on the claims of the broadly defined patent.

Let's consider an example. Patent troll Lodsys purchased patents from a man named Dan Abelow in 2004 and is using it to go after iPhone app developers. One particular Abelow-Lodsys patent is described as such in the summary section of the application:

This Customer-Based Product Design Module invention uses a combination of computer hardware, software and communications technologies to construct a module that is built into certain products and services, to establish a network of customer-vendor-distributor interactions and communications (or a network of internal organization-wide interactions in the area of computer-based performance)… This is the ability to learn interactively and iteratively from the users of products and information systems anywhere in the world while they are in use -- without having to travel to their sites (or without having to bring them to a testing laboratory).

Original inventor Abelow told The Guardian, "The idea was that if you're sitting and holding in your hand a product and you use it, why shouldn't it be aware of your behaviour, digitally, and conduct your needs to the vendor, who could interact with you." He filed that patent before the Internet was a mainstream thing.

Michael Shimokaji, a California intellectual property lawyer and Rocket Lawyer on-call attorney, explained to me how a broadly defined patent works. There's a section of a patent application called "claims" that defines the legal boundaries of an idea. The scope of those patent claims can be broader than the demonstration figures shown. And those are the claims that allow patent trolls to sue companies for infringing.

In the previously mentioned Lodsys patent, there are 74 legal claims listed, the second of which states:

The system of claim 1 in which the user interface is triggered based on user behaviors to generate two-way interactions with each of the users, each of the interactions relating to a corresponding specific one of the behaviors."

I don't speak legalese, but this claim sounds to me like it could apply to half the Internet. Lodsys' patent claims are broad enough that they've already got Apple paying licensing fees for its "in-app" purchasing option, and the troll is simultaneously going after a handful of individual developers who use that option. This is why patent trolls get a bad rap -- they're warping the rules meant to protect innovators, and profiting from it without developing anything themselves.

For more information on patent trolldom, check out this funny, fast-moving video by NowThis News on patent trolls, or read Pando's recent coverage for our Patent Troll Smackdown series:

* The PandoDaily series “Patent Troll Smackdown” is brought to you by the Application Developers Alliance. To join the fight against patent trolls and tell Congress that innovators need patent reform please visit devsbuild.it/fightpatenttrolls. (Sponsored message.)